NEW YORK, NY -- (Marketwire) -- 08/06/12 -- Despite facing a significant drop in coal shipments, railroad stocks have performed admirably in 2012. The Standard and Poor's 500 Railroads Index (S5RAIL) is up roughly 10 percent for the year, slightly beating the S&P 500 Index gain of 9 percent. Five Star Equities examines the outlook for companies in the Railroads Industry and provides equity research on Union Pacific Corporation (NYSE: UNP) and Canadian Pacific Railway Ltd. (NYSE: CP)(TSX: CP).
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The railroads have surprisingly benefited from the very industry responsible for the steep decline in coal shipments. The recent boom in hydraulic fracturing has resulted in railroads transporting more equipment, and petroleum products to and from shale formations for energy companies. Warren Buffett-owned Burlington Northern Santa Fe railroad has seen a 75 percent increase in petroleum carloads, while Union Pacific has seen a 12 percent rise in their fracking-related freight.
"This is a whole industry that just sprung up on all the rail properties," Sterne Agee & Leach Inc. analyst Jeffrey Kauffman stated in a recent telephone interview. "It's a new growth source that helps to mitigate what's probably a temporary dislocation of an old energy source."
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From 2000 through 2011, Union Pacific spent more than $31 billion on its network and operations, making needed investments in America's infrastructure and enhancing its ability to provide safe, reliable, fuel-efficient and environmentally responsible freight transportation. The company's Board of Directors has declared a quarterly dividend of 60 cents per share on its common stock, payable October 1, 2012, to stockholders of record August 31, 2012.
Canadian Pacific operates a North American transcontinental railway providing freight transportation services, logistics solutions and supply chain expertise. For the second quarter of 2012 the company reported net income of $103 million and diluted earnings per share of $0.60. Shares of Canadian Pacific are up nearly 20 percent for the year.
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